While "the trend is your friend" when it comes to short-term investing or trading, timing entries into the trend is a key determinant of success. And increasing the odds of success by making sure the sustainability of a trend isn't easy.Often, the direction of a stock's price movement reverses quickly after taking a position in it, making investors incur a short-term capital loss. So, it's important to ensure that there are enough factors -- such as sound fundamentals, positive earnings estimate revisions, ...

Industry Overview - The Zacks Hotels and Motels industry is experiencing growth due to increased occupancy, average daily rate (ADR), and revenue per available room (RevPAR) [1][3] - Demand has outpaced supply in the first quarter of 2025, leading to positive growth trends [1][3] Growth Strategies - Industry participants are focusing on growth strategies such as expanding portfolios, converting properties, forming partnerships, and enhancing loyalty programs [1][2] Performance Metrics - In Q1 2025, the hotel industry saw a 0.4% year-over-year increase in occupancy, a 1.9% increase in ADR, and a 2.2% improvement in RevPAR [3] - However, CBRE has revised its 2025 outlook for the U.S. hotel industry, now expecting a 1.3% year-over-year increase in RevPAR, down from an earlier projection of 2% [4] Digitalization and Customer Experience - Hotel owners are leveraging digital tools for mobile check-in, self-service bookings, and enhancing customer experience, which is expected to help capture additional market share [5] Cost Challenges - Rising labor costs due to salary increases and labor shortages are concerns for the industry, impacting service quality and operational capacity [6] Industry Ranking - The Zacks Hotels and Motels industry holds a Zacks Industry Rank of 88, placing it in the top 36% of 245 Zacks industries, indicating bright near-term prospects [8][9] Stock Performance - Over the past year, the industry has appreciated by 11.7%, outperforming the S&P 500's 9.3% increase but underperforming the sector's 18% rise [11] Valuation Metrics - The industry is currently trading at a trailing 12-month EV/EBITDA of 16.68X, compared to the S&P 500's 16.39X [13] Company Highlights - **Soho House**: Reported an 8% year-over-year increase in total revenues and significant growth in adjusted EBITDA, with a Zacks Rank of 1 (Strong Buy) [15][16] - **Marriott**: Benefits from robust leisure demand and global booking trends, with a projected year-over-year growth of 4.5% in top line and 8.3% in bottom line for 2025, holding a Zacks Rank of 3 (Hold) [19][20] - **Hilton**: Experienced solid RevPAR improvement driven by increased occupancy and ADR, with a projected EPS growth of 10.5% for 2025, also holding a Zacks Rank of 3 [22][25]

Core Viewpoint - Soho House & Co (SHCO) reported quarterly earnings of $0.04 per share, exceeding the Zacks Consensus Estimate of a loss of $0.14 per share, and showing improvement from a loss of $0.24 per share a year ago [1][2]. Financial Performance - The earnings surprise for the quarter was 128.57%, with the company previously expected to post a loss of $0.07 per share but actually reporting a loss of $0.10 [2]. - Soho House generated revenues of $282.86 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 2.64% and increasing from $263.15 million year-over-year [3]. - Over the last four quarters, the company has exceeded consensus revenue estimates two times [3]. Stock Performance and Outlook - Since the beginning of the year, Soho House shares have declined approximately 17.3%, compared to a 3.7% decline in the S&P 500 [4]. - The company's earnings outlook is mixed, with the current consensus EPS estimate for the upcoming quarter at -$0.10 on revenues of $318.4 million, and -$0.26 on revenues of $1.28 billion for the current fiscal year [8]. Industry Context - The Internet - Software industry, to which Soho House belongs, is currently ranked in the top 37% of over 250 Zacks industries, indicating a favorable position compared to the bottom 50% [9].

Financial Performance - Total revenues for Q1 2025 were $282.9 million, representing an 8.0% year-over-year growth[6]. - Adjusted EBITDA reached $47.0 million, up from $19.8 million in Q1 2024, with an Adjusted EBITDA margin of 17%[6][7]. - Net income attributable to Soho House & Co Inc. was $8.2 million, or $0.04 per share, compared to a net loss of $41.6 million in Q1 2024[6][7]. - Net income for the 13 weeks ended March 30, 2025, was $7,513, compared to a net loss of $41,858 for the same period in 2024, representing a significant turnaround[28]. - Total revenues increased to $282,864 thousand for the 13 weeks ended March 30, 2025, up from $261,944 thousand in 2024, reflecting an increase of 8%[28]. - Adjusted EBITDA rose to $46,962 thousand, compared to $19,806 thousand in the prior year, indicating a substantial improvement[24]. - Operating income for the period was $34,894 thousand, a recovery from a loss of $24,327 thousand in the same quarter of 2024[27]. - Cash provided by operating activities was $22,820 thousand, a notable increase from $6,189 thousand in the same period last year[29]. Membership Growth - Membership revenues increased to $112.9 million, a 14.1% year-over-year rise[6]. - Total membership grew by 3.1% year-over-year to 269,636 members, with Soho House members increasing by 7.1% to 212,001[11][13]. - The number of Soho Houses increased to 45, up from 43 in the previous year[11]. - The number of Soho Houses in operation as of March 30, 2025, is 45, contributing to the overall membership growth strategy[50]. - Total members, including Soho House members and Other members, are critical for revenue generation and profitability[37]. - The company anticipates continued growth in membership and revenue for the remainder of fiscal 2025, despite potential risks and uncertainties[48]. Revenue Sources - House Membership Revenues are primarily derived from annual membership fees and one-time legacy registration fees, with the latter amortized over 20 years[33]. - In-House revenues include all revenues generated within the Houses, such as food and beverage, accommodation, and spa services[34]. - In-House revenues were $112,419 thousand, slightly down from $110,270 thousand, reflecting a decrease of 2%[28]. Financial Position - The company ended Q1 2025 with cash, cash equivalents, and restricted cash totaling $155 million[12]. - The company ended the period with cash, cash equivalents, and restricted cash totaling $154,654 thousand, compared to $142,001 thousand at the end of the same quarter in 2024[30]. - Total assets increased to $2,480,378,000 as of March 30, 2025, up from $2,443,512,000 on December 29, 2024, reflecting a growth of approximately 1.5%[31]. - Total liabilities rose to $2,817,665,000 as of March 30, 2025, compared to $2,772,970,000 at the end of 2024, indicating an increase of about 1.6%[32]. - Current assets totaled $403,127,000, up from $388,401,000, marking an increase of approximately 3.8%[31]. - The company reported a total shareholders' deficit of $337,287,000 as of March 30, 2025, compared to $329,458,000 at the end of 2024[32]. Other Notable Items - The company received $22.9 million in business interruption insurance proceeds related to COVID-19 during the quarter[6][8]. - The company is assessing a third-party offer to take the company private at $9.00 per share, with no assurances of a transaction outcome[5]. - Share-based compensation expenses decreased by 71% to $2,360 thousand from $8,039 thousand in the previous year[27]. - The company reported a foreign exchange loss of $21,521 thousand, compared to a gain of $5,481 thousand in the prior year, indicating significant currency impact[27]. - Active App Users are defined as unique users who have logged into any of the membership Apps within the last three months, indicating engagement levels[46].

Revenue Growth - Total revenues for the 13 weeks ended March 30, 2025, increased to $282,864,000, up 7.9% from $261,944,000 for the same period in 2024[18]. - Membership revenues rose to $112,911,000, a 14.1% increase compared to $98,949,000 in the prior year[18]. - The Company reported total consolidated segment revenue of $282.864 million for the 13 weeks ended March 30, 2025, compared to $241.447 million for the same period in 2024, representing an increase of approximately 17.2%[146]. - Membership revenues reached $116.398 million, with the Americas contributing $56.278 million, the UK $32.219 million, and Europe & RoW $14.019 million[146]. - The Americas segment generated $114.157 million in revenue, while the UK and Europe & RoW segments contributed $81.152 million and $31.580 million, respectively[149]. Profitability - Net income attributable to Soho House & Co Inc. was $8,168,000 for the 13 weeks ended March 30, 2025, compared to a net loss of $41,559,000 in the same period last year[18]. - Operating income for the period was $34,894,000, a significant improvement from an operating loss of $24,327,000 in the prior year[18]. - For the 13 weeks ended March 30, 2025, the company reported a net income of $7.5 million, a significant improvement compared to a net loss of $41.9 million for the same period in 2024[25]. - The effective tax rate for the 13 weeks ended March 30, 2025, was 47.3%, significantly higher than the 7.20% effective tax rate for the same period in 2024[135]. Cash Flow and Liquidity - Net cash provided by operating activities was $22.8 million, up from $6.2 million in the prior year[25]. - Cash and cash equivalents increased to $150.1 million from $139.8 million year-over-year, with total cash, cash equivalents, and restricted cash reaching $154.7 million[27]. - The company has access to an undrawn revolving credit facility of £75 million ($97 million)[45]. - Cash paid for interest decreased to $9.2 million from $10.2 million year-over-year[27]. - The Company reported cash flows from operating activities for operating leases of $(40.799) million for the 13 weeks ended March 30, 2025, compared to $(37.428) million for the same period in 2024, representing an increase of 6.4%[79]. Assets and Liabilities - Total assets as of March 30, 2025, were $2,480,378,000, an increase from $2,443,512,000 as of December 29, 2024[16]. - Total liabilities increased to $2,817,665,000 as of March 30, 2025, compared to $2,772,970,000 at the end of 2024[16]. - Total current assets increased to $21.131 million as of March 30, 2025, compared to $19.994 million as of December 29, 2024[64]. - Total long-term debt, net of current portion, increased to $675.421 million as of March 30, 2025, from $656.868 million as of December 29, 2024, marking a rise of 2.3%[96]. Membership and Demand - As of March 30, 2025, the Company had approximately 269,600 members, including approximately 212,000 Soho House Members[183]. - The SHCO global waitlist stood at over 112,000 applicants as of March 30, 2025, indicating strong demand for membership[186]. - Membership revenues are derived from annual fees and one-time registration fees, with every House annual membership fee approximately $5,200[188][192]. - The company expects to grow its member base by expanding the number of Soho Houses and scaling existing membership brands, aiming for significant and sustained growth[198]. Strategic Initiatives - The company is focused on implementing a new ERP system to enhance internal controls and support strategic growth initiatives[35]. - The company plans to open new Soho Houses in locations such as Mexico City, Portland, and Sao Paulo, enhancing its global footprint[193]. - The pricing of membership and In-House offerings is strategically adjusted to maximize revenue while maintaining high retention rates among members[204]. Impairments and Charges - The Company recognized a $2 million non-cash impairment charge for long-lived assets related to the UK Soho Restaurant sites during the 13 weeks ended March 30, 2025[52]. - The Company recognized $2 million of impairment losses on long-lived assets related to legacy restaurant sites in the UK during the reporting period[146]. Other Financial Metrics - The Company reported interest expense of $14 million for the 13 weeks ended March 30, 2025, compared to $12 million for the same period in 2024, indicating an increase of 16.7%[100]. - The estimated future revenues expected to be recognized in the next twelve months from March 30, 2025, amount to $112.231 million[85]. - The Company incurred $2 million in advisory expenses related to strategic transactions and $1 million for ERP systems implementation during the reporting period[148].

Group 1 - Soho House & Co Inc. (NYSE: SHCO) is highlighted as a unique company in the current market [1] - The focus of Crude Value Insights is on cash flow and companies in the oil and natural gas sector, emphasizing value and growth prospects [1] - Subscribers have access to a stock model account, cash flow analyses of exploration and production firms, and live discussions about the sector [2]

Market Overview - The U.S. stock market is experiencing significant volatility, leading to a pause in major M&A deals and IPOs [1] Industry Insights - Gary Alexander has extensive experience in covering technology companies and has worked in Silicon Valley, providing insights into current industry themes [1] Contributions and Influence - Gary Alexander has been a contributor to Seeking Alpha since 2017 and has been quoted in various web publications, with his articles reaching popular trading apps like Robinhood [1]

Company Performance - Soho House & Co reported a quarterly loss of $0.10 per share, which was worse than the Zacks Consensus Estimate of a loss of $0.07, and the same as the loss reported a year ago [1] - The earnings surprise for this quarter was -42.86%, and the company had previously delivered a surprise of 100% by reporting break-even earnings when a loss of $0.01 was expected [2] - Revenues for the quarter were $305.56 million, missing the Zacks Consensus Estimate by 2.42%, but showing an increase from $290.79 million in the same quarter last year [3] Stock Performance - Since the beginning of the year, Soho House shares have declined by approximately 16.2%, compared to a decline of 5.1% for the S&P 500 [4] - The current Zacks Rank for Soho House is 3 (Hold), indicating that the shares are expected to perform in line with the market in the near future [7] Future Outlook - The consensus EPS estimate for the upcoming quarter is -$0.14 on revenues of $284.34 million, and for the current fiscal year, it is -$0.26 on revenues of $1.3 billion [8] - The estimate revisions trend for Soho House is mixed, and changes in earnings expectations could impact stock performance [5][6] Industry Context - The Internet - Software industry, to which Soho House belongs, is currently in the top 30% of over 250 Zacks industries, suggesting a favorable outlook compared to the bottom 50% [9]

Financial Performance - Total revenues for Q4 2024 were $305.6 million, representing a 5.4% year-over-year growth[4] - Total revenues for fiscal year 2024 reached $1,203.8 million, a 7.0% year-over-year increase[4] - Membership revenues increased to $109.3 million, a 15.6% year-over-year increase[4] - Membership revenues for fiscal year 2024 were $418.0 million, up 17.2% year-over-year[4] - Net loss attributable to Soho House & Co Inc. was $91.7 million, or $0.47 per share, including $51.6 million in non-cash FX losses[4] - Net loss for the fiscal year ended December 29, 2024, was $163,568 thousand, compared to a loss of $129,678 thousand for December 31, 2023, representing a 26% increase[28] - Net loss attributable to Soho House & Co Inc. was $91,685, compared to a loss of $61,360 in the previous year, reflecting a 49.3% increase in losses[33] - Operating loss for the fiscal year ended December 29, 2024, was $70,041 thousand, a significant increase of 97% compared to a loss of $35,593 thousand for December 31, 2023[29] Adjusted EBITDA - Adjusted EBITDA for Q4 2024 was $32.3 million, with an adjusted EBITDA margin of 11%[11] - Adjusted EBITDA increased by 14% to $131,904 thousand for the fiscal year ended December 29, 2024, from $115,605 thousand in the previous year[28] - Adjusted EBITDA for the 13 weeks ended December 29, 2024, was $32,292, a slight decrease of 1% from $32,525 in 2023[24] Membership and Expansion - Total Soho House members grew to 212,447, a 9.6% increase year-over-year[11] - Three new Soho Houses were successfully opened in 2024: Portland, Sao Paulo, and Mews House[4] - House Membership Revenues are primarily derived from annual membership fees and one-time legacy registration fees, with the latter amortized over 20 years[38] - The total number of Soho Houses in operation reflects the company's expansion strategy, with a focus on increasing membership and revenue[42] - Membership revenues are influenced by the number of members, membership mix, and pricing, with higher prices generally in North America compared to the UK and Europe[50] - The company reported strong member retention rates, indicating robust demand and loyalty among members[45] Expenses and Losses - House-Level Contribution for the 13 weeks ended December 29, 2024, was $60,725, a decrease of 5% compared to $64,113 for the same period in 2023[25] - House-Level Contribution Margin decreased to 27% from 30% year-over-year[25] - In-House operating expenses increased by 11% to $164,102 for the 13 weeks ended December 29, 2024, compared to $147,817 in 2023[27] - General and administrative expenses rose by 7% to $152,922 thousand in the fiscal year ended December 29, 2024, compared to $143,583 thousand in the previous year[29] - Total operating expenses rose to $376,211, an increase of 18.5% from $317,506 in the prior year[33] Cash and Debt - The company ended Q4 2024 with cash and cash equivalents of $156 million[13] - Net debt increased by 5% to $672,553 thousand as of December 29, 2024, compared to $640,859 thousand as of December 31, 2023[32] - The current portion of debt increased by 18% to $34,618 thousand as of December 29, 2024, from $29,290 thousand as of December 31, 2023[32] - Cash and cash equivalents decreased to $152,716 from $159,155, a decline of 4.3%[35] Foreign Exchange and Impairment - Foreign exchange gain for the 13 weeks ended December 29, 2024, was $51,645, compared to a loss of $(32,297) in 2023[27] - The company recognized impairment losses of $13,567 on long-lived assets and intangible assets for the 13 weeks ended December 29, 2024, a 72% decrease from $47,772 in 2023[27] - The company recognized impairment losses of $32,345 thousand on long-lived assets for the fiscal year ended December 29, 2024, down 32% from $47,772 thousand in the previous year[29] - The company recognized a loss of $6,204 thousand on goodwill related to certain reporting units during the fiscal year ended December 29, 2024[28] Shareholder Activities - A third-party consortium has made an offer to take the company private for $9.00 per share, currently under assessment[8] - The company incurred expenses related to shareholder activism amounting to $1,885 thousand during the fiscal year ended December 29, 2024[28] Digital Engagement - Active App Users are defined as unique users who have logged into membership Apps within the last three months, highlighting engagement with digital platforms[53] Forward-Looking Statements - Forward-looking statements indicate expectations for financial performance in fiscal 2024, subject to risks and uncertainties that may affect actual results[55]

Membership and Growth - As of December 29, 2024, Soho House & Co has approximately 271,500 members, including around 212,400 Soho House members[18]. - The global waitlist for membership stands at over 112,000 applicants as of December 29, 2024[22]. - Soho House membership fees are approximately $5,200 annually, providing access to all Houses globally[33]. - The Cities Without Houses membership has 12,518 members across 84 cities as of December 29, 2024, with planned openings in Portland, USA (March 2024) and Sao Paulo, Brazil (June 2024)[34]. - Soho Friends membership reached 53,110 members as of December 29, 2024, with an annual fee of approximately $130[34]. - Soho Works has 5,984 members as of December 29, 2024, with membership fees ranging from $200 to $750 per month for Soho House members[36]. - The company increased its total House count to 45 in fiscal 2024, up from 42 in fiscal 2023, with plans for two to three new openings in 2025[42]. - In fiscal 2024, over one million non-member guests visited the Houses, with a goal to convert them into members[45]. - The company plans to expand its presence in new and existing markets, focusing on establishing Houses in key cultural cities and integrating complementary products and services[105]. Financial Performance - The company incurred net losses of $164 million, $130 million, and $223 million in fiscal years 2024, 2023, and 2022, respectively, with an accumulated deficit of $1,540 million as of December 29, 2024[80]. - The company incurred a consolidated net loss of $164 million during fiscal 2024, despite generating positive cash flows from operations of $90 million[103]. - The company is dependent on distributions from subsidiaries to cover taxes and operating expenses, which may be restricted by existing credit facilities[115]. - Inflation could adversely affect the company's financial condition and results of operations, as it may not be able to adjust member pricing accordingly[120]. - The company has an outstanding debt balance of $983 million as of December 29, 2024, which includes Senior Secured Notes and other loans[124]. Operational Strategy - The company has adopted an asset-light development model for new House openings, significantly reducing initial investment costs to $2 million to $8 million[26]. - For openings not following the asset-light model, initial investments are expected to be in the $10 million to $20 million range[26]. - The company continues to explore new openings on a case-by-case basis to balance member experience and optimize returns[25]. - The company has historically invested significantly in opening new Houses and enhancing membership experiences, which may continue to incur higher expenses than anticipated[80]. - The company is exposed to foreign currency exchange rate risk due to operations in non-US countries, particularly the UK, with no current hedging arrangements in place[109]. Market and Competitive Position - The company believes it has a first-mover advantage in the private membership club sector, creating significant barriers to entry for competitors[63]. - The company faces challenges in maintaining and expanding its international operations due to risks such as exchange rate fluctuations and differing protection of intellectual property rights[108]. - The company has experienced significant growth in its business activities, which places demands on its administrative and operational resources[83]. Regulatory and Compliance Risks - The company is subject to extensive environmental, health, and safety regulations across all operating regions, which may impact operational costs and compliance efforts[70]. - The company is subject to regulatory scrutiny regarding data privacy, which may necessitate changes in business operations and incur additional compliance costs[169]. - The company may incur substantial costs due to compliance with privacy laws and potential litigation from privacy-related claims[176]. - The company faces risks related to compliance with the US Foreign Corrupt Practices Act and the UK Bribery Act, which could result in severe penalties if violated[190]. Brand and Reputation - The company’s brand value is critical to attracting and retaining members, and any incidents that damage its reputation could adversely affect its business[86]. - The company has faced brand squatting issues in regions like South America and Asia, complicating trademark registration efforts[93]. - The company has not been able to protect its trademarks in significant jurisdictions such as China and Mexico, which may lead to brand dilution and customer confusion[94]. Technology and Cybersecurity - The reliance on information technology systems is critical, and any failure could harm business operations and reputation[155]. - Cybersecurity risks are a significant concern, with potential for data breaches that could lead to negative publicity and financial impact[159]. - The implementation of new technology systems, such as the Enterprise Resource Planning (ERP), may cause operational disruptions and increased costs[158]. - The complexity of IT systems increases vulnerability to security breaches, which could disrupt business operations and damage customer relationships[168]. Labor and Employment - The company faces risks from unionization efforts, particularly in regions with strong labor rights focus[183]. - The company is subject to various employment laws and may face claims related to employment discrimination and wage-hour issues[184]. - The company may face challenges in hiring qualified employees necessary for compliance with financial reporting regulations, impacting its operational effectiveness[199]. Governance and Control - The Voting Group controls approximately 96.6% of the combined voting power of the outstanding common stock, significantly limiting other stockholders' influence on corporate matters[204]. - The company qualifies as a 'controlled company' under NYSE rules, allowing it to rely on exemptions from certain corporate governance requirements[210]. - Certain directors have affiliations with Yucaipa, which may lead to conflicts of interest affecting the company's business decisions[211].